At the beginning of January, take the bulls to fields of heather
3 min read

At the beginning of January, take the bulls to fields of heather

Cryptic ball: the fear of alternatives.

Welcome to the last newsletter of the year. Bitcoin finally tested $45.5k in the first hours of this Thursday, UTC. However, we didn't get the extreme liquidations and negative funding that would be comforting to see before assuming a change in trend. Remember a high volume of liquidated longs happens once price moves against over-leveraged traders, who are forced to automatically close (sell) their positions. It is aligned with local bottoms as all the unintended selling takes place very fast, which turns funding rates negative on perpetual futures exchanges - incentivising traders and bots to buy to collect the funding fee that is paid, and disincentivising shorts which have to pay to bet that prices will fall more.

Without such an extreme move, it's more common to see a slow-bleed until sentiment changes. If the bleed is not that slow, sentiment won't change and bears will dominate the larger trend. If instead we remain trading sideways, then it's possible alts start pumping, reigniting animal spirits. But what can happen this weekend? I see two scenarios: on the one hand, as written yesterday, we can see BTC testing $42k, which would drag down the entire market; on the other hand, if Friday's $6B options expiry turns out to be uneventful, we can finally clear the FUD and have that bullish January without needing to inflict more pain.

I'm more inclined to the latter, as today's bounce would have been the perfect opportunity for bears to wreack havoc - and that did not happen. Moreover, it seems the options market is creating incentives for BTC to close the year around $48k. After that, it's all about waiting to see when the orange coin breaks upwards of $52k and then the whole market will be ready to pump. In the meantime, don't forget to read Cobie's latest post and reflect upon what the year ahead may bring us. Keep on learning and I'm sure we'll all gonna make it in 2022!

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Our newsletter offers opinions and insights from analysts in the cryptoasset space. It is not intended to be investment advice, and should not be treated as such. You must not rely on its information as an alternative to financial advice from a qualified professional. Without prejudice, we do not undertake or guarantee that its information is correct, complete or non-misleading; or that the use of guidance in the report will lead to any particular outcome or result.